Xerox offers HP shareholders a better deal

Xerox Corporation has come back to HP shareholders with a counter offer, sweetening the deal with more for the shareholders.

According to a proposal by Xerox vice-chairman and CEO John Visentin, the offer includes US$17 per share in cash and 48 per cent of the pro forma of the combined company, which he said he believes is worth US$14 per share.

“By harvesting these synergies, which can only be realised with this combination, the new pro forma company will be both more profitable and better positioned to provide customers with a stronger mix of products, services and support than either company can do on its own,” Visentin said, in the proposal.

“The value of the transaction goes beyond economics. In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way.”

He added that the increased cash flow generated by the deal will allow for rapid de-leveraging, greater capital returns to shareholders and enhanced investment in innovation that can put the brands at the forefront “for decades to come”.

“We strongly encourage you to urge HP’s board of directors to pursue this transaction on a friendly basis, starting with the provision of mutual due diligence,” he added.

The move follows HP’s board of directors recently giving Xerox the thumbs down on its offer to buy the business for US$33.5 billion, citing concerns about Xerox’s declining revenue and future business trajectory.

The latter then responded by sending a letter to members of HP’s board of directors telling them to reconsider the offer before it takes the case directly to HP shareholders.

The letter, from Xerox vice-chairman and CEO John Visentin said, “unless you and we agree on mutual confirmatory due diligence to support a friendly combination by 5:00 p.m. EST on Monday, November 25, 2019, Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders.

“The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction.”

Following which Carl Icahn, a sizeable shareholder in both HP and Xerox, issued an open letter to fellow HP shareholders urging them to push HP’s board of directors to accept Xerox’s $US33.5 billion takeover bid.

Icahn, who owns 10.85 per cent of Xerox shares and 4.24 per cent of HP shares questioned whether this refusal is also about preserving the “lucrative positions of the CEO and members of the board”.

“While this might sound cynical, over the last several decades as an activist I have made billions and billions of dollars not only for Icahn Enterprises but for all shareholders by standing up to managements and boards that have refused to do anything that would change the status quo, which might mean threatening their huge incomes,” Icahn stated.

“While there are many good and caring boards and managements, there also are many terrible ones that have cost shareholders dearly by failing to act in their best interests, as HP’s board and management seem to be doing now.

“I cannot believe that the recalcitrance of HP’s board is driven by any real confidence in its standalone restructuring plan, which the market, shareholders and analysts met with extreme indifference and which seems to amount to little more than rearranging the deck chairs on the Titanic.”




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